PUTIN WANTS THE SOCIAL TAX REDUCED

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PUTIN WANTS THE SOCIAL TAX REDUCED

Nezavisimaya Gazeta, April 26, 2001, EV

President Vladimir Putin instructed the Cabinet yesterday to reduce the common social tax. The idea came from deputy Duma speaker Irina Khakamada of the Union of Right Forces, who had met with the president shortly before that.

Putin’s meeting with Economic Development Minister Herman Gref, Taxes and Duties Minister Gennadi Bukayev, and Labor and Social Development Minister Alexander Pochinok focused on this issue.

STATE COMMISSION FOR NEGOTIATION WITH GEORGIA

Nezavisimaya Gazeta, April 26, 2001, EV

President Vladimir Putin signed a decree establishing a state panel for preparing a draft Russian-Georgian treaty on friendship, neighborly relations, cooperation, and mutual security. Sources in the presidential PR department say the commission will be chaired by Boris Pastukhov, head of the Duma committee for the CIS and ethnic Russians abroad. The commission will attend talks with Georgia and promote resolution of problems in bilateral relations.

A TERRORIST ACT IN GUDERMES

Izvestia, April 26, 2001, p. 2

The terrorists may be trying to speed up the process of moving the government from Gudermes to Grozny, where its safety will be even more problematic.

GUSINSKY’S "SPANISH SAGA" IS OVER

Izvestia, April 26, 2001, p. 3

Before leaving Gibraltar on a chartered jet, Gusinsky spent 45 minutes talking to Western journalists – drinking Scotch, eating pistachios, and elaborating on the situation in Russia.

It certainly seems that Gusinsky has no plans to return to Russia, ever. He urged Europeans to “fear Putin, who longs for absolute power”. Moreover, he compared the Russian president with Slobodan Milosevic.

Gusinsky called Moscow a concentration camp.

Gusinsky: You cannot discuss the media in a concentration camp. And Moscow is a concentration camp nowadays.

How will this statement be viewed in Israel, where many people have a different notion of concentration camps?

ECHO OF MOSCOW JOURNALISTS WILL BUY SHARES IN THE COMPANY

Moskovsky Komsomolets, April 26, 2001, p. 8

Aleksei Venediktov, general manager of Echo of Moscow radio, announced at the session of the Parliamentary Assembly of the Council of Europe yesterday that Echo of Moscow staff had raised enough money to buy a 25% stake in the radio station, which is owned by Media-Most but mortgaged to Gazprom. According to Venediktov, Vladimir Gusinsky has no objection to this. If the deal goes through, the journalists will control 55% of Echo of Moscow. If the state intervenes, Venediktov will start looking for a new job.

PRESIDENT PUTIN WILL MEET WITH OIL BARONS

Parlamentskaya Gazeta, April 26, 2001, p. 3

Oil industry executives will listen to a speech giving more details about one point in the president’s address to the Federal Assembly. President Putin was quite explicit in his address about his intention to channel profits from natural resources industries into the real sector of the economy. Systematic tax increases aimed at stripping certain industries of their revenues are known as “creeping expropriation” in the West.

The Russian government tried to raise taxes several months ago, but oil companies thwarted that attempt. The conflict ended in export duties being indexed, bringing them into line with the new dollar/euro exchange rate. The dialogue between the state and oil companies is to be resumed, and now the president will do the talking. The Kremlin’s political standing is firm, a strong executive power hierarchy is in place, and Putin appears intent on demonstrating its effectiveness in this sensitive field.

Details of what the oil executives will hear in the Kremlin are unknown at this point. As a career intelligence officer, Putin is used to thinking in terms of “operations” and “counter-operations” which should be thoroughly prepared and set into motion only when there is no risk of failure. It is known that the president will concentrate on the problem of transfer price setting. Abolishing this will be an element of the new system of taxation for the oil sector. But it’s export duties, not taxes, which play the main fiscal role in the fuel and energy sector. Putin will mention them too. He will probably support the Cabinet’s proposal to increase export duties.

The oil barons will hear some personal criticism as well. Vagit Alekperov of LUKoil will be reprimanded for tax evasion and sending profits to offshore zones. In Russia, a ton of oil sells for 4-5,000 rubles, but LUKoil buys oil from its subsidiaries for 1,000 rubles a ton. It isn’t hard to calculate the losses to regional and federal budgets. Some political grievances against Alekperov may be expressed as well. The president does not like it when someone else tries to dabble in politics in Russia. But LUKoil has been very active recently in sponsoring regional election campaigns. Moreover, relations between LUKoil and the Foreign Ministry are deteriorating again. The company’s export expansion regularly creates problems for Russian diplomats in Latvia and Lithuania, in Iraq and in the Caspian region.

Time will tell how far Putin is prepared to go in his desire to make LUKoil more transparent, but he is unlikely to stop half-way.

COMBAT PAY ABOLISHED

Trud-7, April 26, 2001, p. 3

President Putin has visited Chechnya to get firsthand knowledge of wage backlogs in the military. He was appalled at what he discovered. Financial structures in Chechnya use the same old system of wage backlogs. Total arrears in combat pay for soldiers in Chechnya are 2.3 billion rubles.

The soldiers are refusing to tolerate this. Colonel General Vladislav Putilin, Deputy Chief of the General Staff, is forced to admit that contract servicemen are leaving Chechnya en masse.

In other words, the situation deteriorated to such an extent that the president’s intervention became essential. The president has intervened – by abolishing combat pay altogether. A special meeting on this issue took place at the Kremlin. Another reorganization of the finances for the troops fighting in Chechnya will come into effect from May 1. According to Deputy Finance Minister Lyubov Kudelina, the new system will result in much higher wages for soldiers. Wage bonuses will amount to 100% (against the current 50%). The so-called “field pay” will be raised by 30%. Specialists say that a company commander will be paid up to 11,000 rubles a months (against 7,000 rubles now).

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